The Wall Street Journal
In an attempt to win over fashionable young women, J.C. Penney Co. is going to try running with a faster crowd.
This week, the Plano, Texas-based retailer unveiled an unconventional collaboration with Mango MNG Holding SL, the closely-held Barcelona chain known for whipping up cutting edge looks that go from design studio to store shelves in as little as four weeks.
The move is a big bet for the 108-year-old Penney, which has been trying to grab market share from more stylish competitors to spur sales as overall demand for women's apparel is sluggish.
The two retailers are a fashion mismatch. Penney's average customer is a 35- to 53-year-old bargain hunter who shops four times a year. Mango, founded in 1984, caters to style-obsessed twenty-somethings who shop every month and pay full price. By delivering new merchandise to stores at least once a week, the chain has trained customers to buy early and often.
But for Penney, that's the draw. "If you only deliver four times a year, there's only a reason to come to the store four times a year," Chief Executive Myron E. Ullman III said at a recent conference.
Mango is one of the hottest retailers in Europe, where it operates hundreds of stores and its ads feature celebrities including Penelope Cruz and Scarlett Johansson. Unlike other fast-fashion chains such as Inditex SA's Zara and Hennes & Mauritz AB's H&M, the chain is little-known in the U.S., where it only has 12 retail outposts. Revenue last year was €1.15 billion ($1.82 billion).
The exclusive-to-Penney brand, called MNG by Mango, will launch at 77 stores on Aug. 18 and roll out to 600 of Penney's 1,100 stores by next fall. Penney is investing in fixtures such as hardwood floors, black chandeliers and modern tables that showcase looks like skinny jeans and lace-embellished blouses. In-store boutiques, averaging 1,000 square feet, will be refreshed every other week—twice as fast as Penney's other brands. Prices will be in the mid-to-upper tier of Penney's offerings, with skirts ranging from $50 to $100, and jackets from $60 to $160.
The Mango-Penney collaboration comes as U.S. apparel retailers have been fighting for market share. The women's apparel market has been essentially flat for the past three years, according to market researcher NPD Group, but "there has been huge growth in dollar volume in fast fashion," says Liz Sweney, senior general merchandise manager for Penney's women's businesses.
American department stores were caught off guard by the onslaught of fast fashion rivals that own local factories, enabling them react quickly to changes in demand. They have trained their customers to expect scarcity, leading to higher margins and more store visits.
Department stores, by contrast, source most of their products from faraway vendors up to a year in advance. The sourcing model keeps production costs down, but can lead to fashion miscalculations and aggressive discounting that kills profits.
Penney is working to resume sales gains after a restructuring a decade ago that centralized its operations. The department store's annual revenues peaked in 2006 at $19.9 billion and were $17.6 billion last year. Mr. Ullman said in April that he wants to boost sales by $5 billion by the end of 2014, in part by attracting new customers.
Investors have their doubts. The company's stock is down more than 20% this year, well behind competitors such as Macy's Inc. and discounters like Kohl's Corp. and TJX Cos. Penney has struggled with more than two years of monthly sales declines. The trend started to reverse itself earlier this year, after Penney better matched its inventory to demand and upgraded its product assortment. But home products, which account for about 19% of Penney's annual sales, have been a drag, says J.P. Morgan analyst Charles Grom.
In apparel, Penney is still trying to shed its unfashionable image. Over the past five years, it has worked to convince shoppers that its wares are just as chic as its more upscale competitors. The company has expanded its store-within-a-store Sephora cosmetics department and added exclusive lines from Polo Ralph Lauren Corp. and others.
Despite the new brands, Penney's research showed it wasn't getting traction with fashionable young women. "We're great in teenage space, and really good once a woman has her first baby or buys her first home, but weaker with that early 20-something, early 30-something customer," says Ms. Sweney.
To Joana Lin, a 25-year-old New Yorker, J.C. Penney is "kind of cheap." Still, Ms. Lin says that the Mango brand might be just the thing to bring her back to Penney. "I like it enough, that I might go and take a look," said Ms. Lin, who frequently shops the Mango store in downtown Manhattan.
Last year, the company unveiled what was then its fastest brand, a juniors line called City Streets, which was able to go from factory to stores in a matter of 12 weeks. Ms. Sweney said that with the success of City Streets' cycle-time reduction initiatives, "we knew we could get it done" with Mango.
This week, the Plano, Texas-based retailer unveiled an unconventional collaboration with Mango MNG Holding SL, the closely-held Barcelona chain known for whipping up cutting edge looks that go from design studio to store shelves in as little as four weeks.
The move is a big bet for the 108-year-old Penney, which has been trying to grab market share from more stylish competitors to spur sales as overall demand for women's apparel is sluggish.
The two retailers are a fashion mismatch. Penney's average customer is a 35- to 53-year-old bargain hunter who shops four times a year. Mango, founded in 1984, caters to style-obsessed twenty-somethings who shop every month and pay full price. By delivering new merchandise to stores at least once a week, the chain has trained customers to buy early and often.
But for Penney, that's the draw. "If you only deliver four times a year, there's only a reason to come to the store four times a year," Chief Executive Myron E. Ullman III said at a recent conference.
Mango is one of the hottest retailers in Europe, where it operates hundreds of stores and its ads feature celebrities including Penelope Cruz and Scarlett Johansson. Unlike other fast-fashion chains such as Inditex SA's Zara and Hennes & Mauritz AB's H&M, the chain is little-known in the U.S., where it only has 12 retail outposts. Revenue last year was €1.15 billion ($1.82 billion).
The exclusive-to-Penney brand, called MNG by Mango, will launch at 77 stores on Aug. 18 and roll out to 600 of Penney's 1,100 stores by next fall. Penney is investing in fixtures such as hardwood floors, black chandeliers and modern tables that showcase looks like skinny jeans and lace-embellished blouses. In-store boutiques, averaging 1,000 square feet, will be refreshed every other week—twice as fast as Penney's other brands. Prices will be in the mid-to-upper tier of Penney's offerings, with skirts ranging from $50 to $100, and jackets from $60 to $160.
The Mango-Penney collaboration comes as U.S. apparel retailers have been fighting for market share. The women's apparel market has been essentially flat for the past three years, according to market researcher NPD Group, but "there has been huge growth in dollar volume in fast fashion," says Liz Sweney, senior general merchandise manager for Penney's women's businesses.
American department stores were caught off guard by the onslaught of fast fashion rivals that own local factories, enabling them react quickly to changes in demand. They have trained their customers to expect scarcity, leading to higher margins and more store visits.
Department stores, by contrast, source most of their products from faraway vendors up to a year in advance. The sourcing model keeps production costs down, but can lead to fashion miscalculations and aggressive discounting that kills profits.
Penney is working to resume sales gains after a restructuring a decade ago that centralized its operations. The department store's annual revenues peaked in 2006 at $19.9 billion and were $17.6 billion last year. Mr. Ullman said in April that he wants to boost sales by $5 billion by the end of 2014, in part by attracting new customers.
Investors have their doubts. The company's stock is down more than 20% this year, well behind competitors such as Macy's Inc. and discounters like Kohl's Corp. and TJX Cos. Penney has struggled with more than two years of monthly sales declines. The trend started to reverse itself earlier this year, after Penney better matched its inventory to demand and upgraded its product assortment. But home products, which account for about 19% of Penney's annual sales, have been a drag, says J.P. Morgan analyst Charles Grom.
In apparel, Penney is still trying to shed its unfashionable image. Over the past five years, it has worked to convince shoppers that its wares are just as chic as its more upscale competitors. The company has expanded its store-within-a-store Sephora cosmetics department and added exclusive lines from Polo Ralph Lauren Corp. and others.
Despite the new brands, Penney's research showed it wasn't getting traction with fashionable young women. "We're great in teenage space, and really good once a woman has her first baby or buys her first home, but weaker with that early 20-something, early 30-something customer," says Ms. Sweney.
To Joana Lin, a 25-year-old New Yorker, J.C. Penney is "kind of cheap." Still, Ms. Lin says that the Mango brand might be just the thing to bring her back to Penney. "I like it enough, that I might go and take a look," said Ms. Lin, who frequently shops the Mango store in downtown Manhattan.
Last year, the company unveiled what was then its fastest brand, a juniors line called City Streets, which was able to go from factory to stores in a matter of 12 weeks. Ms. Sweney said that with the success of City Streets' cycle-time reduction initiatives, "we knew we could get it done" with Mango.
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